Won’t you stay? – prejudice arising from concurrent civil and criminal proceedings

Civil courts are sometimes asked to stay their proceedings in order to avoid prejudice to a party who is facing concurrent criminal proceedings, for example where there is a factual overlap concerning allegations of dishonesty or fraud. The courts are slow to grant a stay, and will always try to resolve the issue by case management measures short of a stay; but they will stay proceedings, in the exercise of their discretion, in an appropriate case.

The starting point is s 49(3) of the Senior Courts Act 1981, which provides:

Nothing in this Act shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.

CPR 3.1(2)(f) provides that the court may, unless the rules provide otherwise, ‘stay the whole or part of any proceedings or judgment either generally or until a specified date or event’.

The party seeking to stay civil proceedings where there are concurrent criminal proceedings is typically the defendant in both sets of proceedings, although as two recent decisions illustrate, this is not always the case.

In Bittar v The Financial Conduct Authority[1], the Financial Conduct Authority, supported by the Serious Fraud Office (‘SFO’), which was the prosecutor in concurrent criminal proceedings, sought a stay of its reference to the Upper Tax Tribunal (Tax and Chancery Chambers – Financial Services) pending resolution of the SFO’s criminal proceedings in respect of a charge of conspiracy to defraud. The SFO’s objections included that the defendant might seek to introduce evidence given or findings made by the Tribunal into the criminal proceedings, and said that it, too, was entitled to a fair trial.

The Tribunal said that there was a strong presumption against a stay and that it was a power which had to be exercised with great care and ‘only where there is a test of real risk of serious prejudice which may lead to injustice[2]. It declined to order a stay, partly on the grounds that any prejudice could be mitigated by case management measures including, if necessary, deferring the hearing of the reference itself until after the criminal proceedings had concluded.[3] In the meantime, the Tribunal gave directions for the parties to prepare for the hearing, and said that the matter should be kept under review.[4]

In Polonskiy v Alexander Dobrovinsky & Partners LLP,[5] the claimant asked the High Court to stay civil proceedings which he himself had brought, and to stay a counterclaim brought by a defendant, pending the resolution of criminal proceedings against him in Russia. He relied on an alleged risk of injustice to him not in the criminal proceedings, but in the civil proceedings. This was an unpromising start and, although the court considered the matter in detail (in a judgment which was 153 paragraphs long), it ultimately declined to grant a stay. The defendant in the civil proceedings tried unsuccessfully to persuade the court that the test to be applied was that a stay should be granted only in ‘rare and compelling circumstances’,[6] which is the test usually applied where the court is being asked to stay civil proceedings in favour of other civil (court or arbitral) proceedings.[7] The court rejected this submission and instead applied the principle, derived from earlier decisions of the Court of Appeal, that the court has a discretion to stay civil proceedings until related criminal proceedings have been determined, but that this is ‘a power which has to be exercised with great care and only where there is a real risk of serious prejudice which may lead to injustice’.[8]

  1. [2016] UKUT 265 (TCC).
  2. At para 16.
  3. See para 17.
  4. See para 17.
  5. [2016] EWHC 1114 (Ch) (Mr G Moss QC, sitting as a deputy judge of the High Court).
  6. See paras 135-139.
  7. See eg Reichhold Norway ASA v Goldman Sachs International (a firm) [2000] 1 WLR 173, CA, 186 (Bingham LJ).
  8. See paras 133 and 139; the quotation is from R v Panel on Takeovers and Mergers, ex p Fayed [1992] BCC 524, CA, 531 (Neill LJ); approved: Attorney-General of Zambia v Meer Care & Desai (a firm) [2006] EWCA Civ 390, para 36 (Sir Anthony Clarke MR).